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In 1-3 sentences, describe the saving-borrowing-investing cycle.

User Kevmando
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4 votes

Answer:

see below

Step-by-step explanation:

Saving involves putting aside a portion of one's income for future consumption. Financial institutions provide savings accounts where the public can save money. When many people save, the banks find themselves holding a lot of money in their custody. Since the banks have a need to make profits, they loan out these savings to individuals and businesses for expansion and consumption. When businesses borrow to expand, they are investing; when individuals borrow to start a business, it's an investment.

Savings in financial institutions provide funds for businesses and households to borrow and invest. The proceeds of investments are deposited in banks, loaned out again, and the cycle continues.

User Mils
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